How Does the FBI Seize Bitcoins?

Federal agents seized more than 26,000 bitcoins worth about $4 million following a raid on the shadowy Internet drug market known as “Silk Road.” The digital currency is now stored on an FBI-controlled account.

So how does the government seize digital currency? Well, it’s not as easy as pulling cash out of a freezer.

To transfer or spend a bitcoin, you need to know the “private key,” a secret sequence of numbers assigned to each coin. The keys are stored offline in encrypted “wallet” files. To unlock the files, you need a password. There’s not really a way around that.

Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, explains.